Financial Report 3Q12

Transcription

1 Financial Report 3Q12

2 Financial highlights in / end of % change in / end of % change 3Q12 2Q12 3Q11 QoQ YoY 9M12 9M11 YoY Net income (CHF million) Net income attributable to shareholders (68) (63) 1,086 2,590 (58) Earnings per share (CHF) Basic earnings per share (67) (70) (63) Diluted earnings per share (65) (70) (64) Return on equity (%, annualized) Return on equity attributable to shareholders Core Results (CHF million) 1 Net revenues 5,766 6,241 6,817 (8) (15) 17,885 20,956 (15) Provision for credit losses (51) Total operating expenses 5,366 5,105 5,697 5 (6) 16,275 17,119 (5) Income before taxes 359 1,111 1,036 (68) (65) 1,510 3,747 (60) Core Results statement of operations metrics (%) 1 Cost/income ratio Pre-tax income margin Effective tax rate Net income margin Assets under management and net new assets (CHF billion) Assets under management 1, , , , , Net new assets (33.8) (90.5) Balance sheet statistics (CHF million) Total assets 1,023,292 1,043,455 1,061,521 (2) (4) 1,023,292 1,061,521 (4) Net loans 242, , , , ,447 7 Total shareholders equity 35,682 34,774 33, ,682 33,519 6 Tangible shareholders equity 3 26,798 25,831 24, ,798 24,889 8 Book value per share outstanding (CHF) Total book value per share (1) (1) Tangible book value per share Shares outstanding (million) Common shares issued 1, , , , , Treasury shares (27.4) (3.5) 0.0 (27.4) 0.0 Shares outstanding 1, , , , , Market capitalization Market capitalization (CHF million) 26,309 22,207 28, (9) 26,309 28,872 (9) Market capitalization (USD million) 27,920 23,583 31, (12) 27,920 31,567 (12) BIS statistics (Basel II.5) 4 Risk-weighted assets (CHF million) 233, , ,758 0 (4) 233, ,758 (4) Tier 1 ratio (%) Core tier 1 ratio (%) Number of employees (full-time equivalents) Number of employees 48,400 48,200 50,700 0 (5) 48,400 50,700 (5) 1 Refer to Credit Suisse Reporting structure and Core Results in I Credit Suisse results Credit Suisse for further information on Core Results. 2 Based on amounts attributable to shareholders. 3 A non-gaap financial measure. Tangible shareholders equity is calculated by deducting goodwill and other intangible assets from total shareholders equity. 4 Reported under Basel II.5 since December 31, Previously reported under Basel II. Prior periods have been adjusted to conform to the current presentation. Refer to Treasury management in II Treasury, risk, balance sheet and off-balance sheet for further information.

3 Dear shareholders In the third quarter of 2012, our businesses produced solid results, while at the same time improving the efficiency of their operations. Adjusting for accounting-driven fair value losses on own debt of CHF 1.0 billion due to the tightening of our own credit spreads and other significant non-operating items, we delivered underlying* core pre-tax income of CHF 1,203 million, underlying* net income attributable to shareholders of CHF 891 million and underlying* return on equity of 9.6% for the third quarter of Without these adjustments, we reported core pre-tax income of CHF 359 million, net income attributable to shareholders of CHF 254 million and a return on equity of 2.9% for the third quarter of For the first nine months of 2012, we delivered underlying* core pre-tax income of CHF 3,835 million, underlying* net income attributable to shareholders of CHF 2,761 million and underlying* return on equity of 10.4%, adjusting for fair value losses on own debt of CHF 2.6 billion and other significant non-operating items. Our reported core pre-tax income was CHF 1,510 million, net income attributable to shareholders was CHF 1,086 million and return on equity was 4.2% for the first nine months of We are successfully executing on the measures we began last year, while maintaining strong momentum with our clients. We have realigned our business to better meet the demands of a changed regulatory and market environment and, in doing so, have substantially reduced risks. At the same time, we have significantly cut costs and improved efficiencies across the bank. Additionally, we have further strengthened our capital base and have improved our balance sheet structure to meet future regulatory requirements. Performance of our businesses in the third quarter In Private Banking in the third quarter of 2012, we reported net revenues of CHF 2,591 million. This is a 4% decline compared to the previous quarter. Total operating expenses for Private Banking were stable compared to the second quarter of 2012, as lower compensation and benefits were offset by higher general and administrative expenses, primarily driven by regulatory costs. Private Banking results reflect margin pressure in an operating environment characterized by low levels of client activity and a rise in the cost of doing business, partially mitigated by the continuing implementation of our strategic initiatives. In Investment Banking in the third quarter of 2012, we reported net revenues of CHF 3,296 million, up 13% from the previous quarter due to strong results in both fixed income sales and trading and underwriting and advisory. As a result of our refined strategy, fixed income results reflected a more bal- Brady W. Dougan, Chief Executive Officer (left) and Urs Rohner, Chairman of the Board of Directors. anced business portfolio with reduced revenue volatility, including a significant decline in inventory levels. Investment Banking results benefited from the expense reduction measures implemented over the past 15 months, improving the pretax margin for the first nine months of 2012 to 18%, compared to 10% in the prior-year period. In Asset Management in the third quarter of 2012, we reported net revenues of CHF 607 million, up 10% from the previous quarter. This result included a gain of CHF 140 million on the sale of our remaining ownership interest in Aberdeen Asset Management. Total operating expenses in Asset Management were 8% lower than in the prior quarter, driven by both lower compensation and benefits and lower general and administrative expenses. Cost savings and capital measures well on track While investing in our client franchise, we are continuing to significantly reduce expenses. Cost savings for the first nine months of 2012 were CHF 2.0 billion compared to an adjusted* run rate for the first half of 2011 on an annualized basis and we expect to exceed CHF 3.0 billion in total cost savings in the full year Furthermore, we are now targeting annual savings in excess of CHF 3.5 billion during 2014 and savings of CHF 4.0 billion by the end of 2015, compared to the adjusted* annualized run rate for the first half of These targeted expense reductions provide us with additional operating flexibility, which is crucial to our success, especially in light of the increasing cost of doing business in a changing regulatory environment.

4 The implementation of the capital actions that we announced in July 2012 is well underway. By the end of the third quarter of 2012, these capital measures generated CHF 12.8 billion of our end-2012 target of CHF 15.3 billion and our Look-through Swiss Core Capital ratio** stood at 8.2%. We are continuing to execute on the balance of these measures and estimate our end-2012 Look-through Swiss Core Capital ratio** to be around 9.3% on a pro-forma basis. Furthermore, while we have already reduced our Basel III risk-weighted assets in Investment Banking by 31% to USD 204 billion since the third quarter of 2011 in preparation for the implementation of the Basel III regime in Switzerland, we intend to reduce our risk-weighted assets in Investment Banking by a further 10% to USD 180 billion by the end of Combined with our capital measures, this should ensure that we achieve our target and the Swiss end-2018 requirement of a Swiss Core Capital ratio** of 10% by mid Additionally, we intend to further reduce our balance sheet by CHF 130 billion or 13% of total assets by the end of 2013 on a foreign-exchange neutral basis. We expect this reduction to have a limited impact on our earnings, while ensuring that our leverage ratio is in a strong position. With a FINMA leverage ratio of 5.2% at the end of the third quarter 2012, Credit Suisse is already well in excess of current requirements. Our strong capital position and funding structure, combined with our high-quality balance sheet affirm our position as one of the strongest global banks. Confirming our targets Year to date, we have generated an underlying* return on equity of 10.4% in what we consider to be a very volatile environment with low levels of client activity. We are confident that the full implementation of the strategic, capital and cost-saving measures that we began in 2011 will enable us to reach our target return on equity of 15% or more over the cycle as well as the other stated targets for the bank. Sincerely Urs Rohner October 2012 Brady W. Dougan * Underlying and adjusted results are non-gaap financial measures. The table below includes a reconciliation of certain of these measures. For further information on the calculation of underlying and adjusted measures, including reconciliations for historical periods and the cost run rate on an adjusted annualized basis, see the 3Q12 Results Presentation Slides. **The definitions of regulatory capital and capital ratios refer to the regulations under the Swiss Too Big to Fail regime as determined by FINMA. Ratio calculations based on these capital definitions use projected Basel III year-end 2012 risk-weighted assets. The expected year-end 2012 ratios are based on a pro-forma calculation assuming successful completion of the capital measures announced in July 2012 and using Bloomberg consensus net income estimates (adjusted for actual 9M12 net income and fair value losses on own debt in 3Q12) and our Basel III risk-weighted assets estimates. As Basel III will not be implemented before January 1, 2013, our Basel III risk-weighted assets and capital were calculated in accordance with the currently proposed requirements and our current interpretation of such requirements, including relevant assumptions. Changes in the actual implementation of Basel III or any of our assumptions or estimates would result in different numbers from those used herein. Core Net income attributable pre-tax income to shareholders Return on equity (%) end of 3Q12 9M12 3Q12 9M12 3Q12 9M12 Overview of significant items (CHF million) Reported 359 1, , Fair value losses from movement in own credit spreads 1,048 2, ,957 Realignment costs Gain on sale of ownership interest in Aberdeen Asset Management (140) (384) (122) (326) Gain on sale of non-core business from the integration of Clariden Leu 0 (41) 0 (37) Gain on sale of real estate (382) (382) (325) (325) Impairment of Asset Management Finance LLC Significant Investment Banking litigation provisions Underlying results 1,203 3, ,

5 Financial Report 3Q 12 I 5 Credit Suisse results II 39 Treasury, risk, balance sheet and off-balance sheet III 65 Condensed consolidated financial statements unaudited 158 List of abbreviations 159 Investor information 160 Financial calendar and contacts 161 Cautionary statement regarding forward-looking information For purposes of this report, unless the context otherwise requires, the terms Credit Suisse, the Group, we, us and our mean Credit Suisse Group AG and its consolidated subsidiaries. The business of Credit Suisse AG, the Swiss bank subsidiary of the Group, is substantially similar to the Group, and we use these terms to refer to both when the subject is the same or substantially similar. We use the term the Bank when we are only referring to Credit Suisse AG, the Swiss bank subsidiary of the Group, and its consolidated subsidiaries. Abbreviations are explained in the List of abbreviations in the back of this report. Publications referenced in this report, whether via website links or otherwise, are not incorporated into this report. In various tables, use of indicates not meaningful or not applicable.

6 Credit Suisse at a glance Credit Suisse As one of the world s leading financial services providers, we are committed to delivering our combined financial experience and expertise to corporate, institutional and government clients and to high-net-worth individuals worldwide, as well as to private clients in Switzerland. Founded in 1856, we have a truly global reach today, with operations in over 50 countries and 48,400 employees from approximately 100 different nations. This worldwide reach enables us to generate a geographically balanced stream of revenues and net new assets and allows us to capture growth opportunities wherever they are. We serve our diverse clients through our three divisions, which cooperate closely to provide holistic financial solutions based on innovative products and specially tailored advice. Private Banking Private Banking offers comprehensive advice and a wide range of financial solutions to private, corporate and institutional clients. The Private Banking division comprises the Wealth Management Clients and Corporate & Institutional Clients businesses. In Wealth Management Clients we serve ultra-high-net-worth and high-net-worth individuals around the globe and private clients in Switzerland. Our Corporate & Institutional Clients business serves the needs of corporations and institutional clients, mainly in Switzerland. Investment Banking Investment Banking provides a broad range of financial products and services, including global securities sales, trading and execution, prime brokerage and capital raising services, corporate advisory and comprehensive investment research, with a focus on businesses that are client-driven, flow-based and capital-efficient. Clients include corporations, governments, institutional investors, including hedge funds, and private individuals around the world. Credit Suisse delivers its investment banking capabilities via regional and local teams based in major global financial centers. Strongly anchored in Credit Suisse s integrated model, Investment Banking works closely with the Private Banking and Asset Management division s to provide clients with customized financial solutions. Asset Management Asset Management offers a wide range of investment products and solutions across asset classes, for all investment styles. The division manages global and regional portfolios, separate accounts, mutual funds and other investment vehicles for governments, institutions, corporations and individuals worldwide. Asset Management focuses on becoming a global leader in multi-asset class solutions as well as in alternative investments. To deliver the bank s best investment performance, Asset Management operates as a global integra ted network in close collaboration with the Private Banking and Investment Banking divisions.

7 I Credit Suisse results 6 Operating environment 9 Credit Suisse 11 Core Results (including Overview of results) 20 Private Banking 27 Investment Banking 31 Asset Management 36 Assets under management

8 6 Operating environment Global economic growth slowed in 3Q12, with accelerated GDP contraction in some peripheral European countries. Central banks continued to maintain loose monetary policies with the European Central Bank announcing it stood ready to buy short-dated sovereign bonds, and the US Federal Reserve launching another round of quantitative easing. Equity markets ended the quarter higher, and the US dollar weakened against major currencies, including the Swiss franc. Economic environment Global gross domestic product (GDP) growth slowed further in 3Q12, as market strains persisted with weak consumer confidence and business sentiment amidst continued high unemployment rates, weak consumer spending and a decline in global manufacturing indices. While growth in the US continued, GDP measures contracted in the eurozone. China also experienced a further growth slowdown, as did most other emerging markets. Inflation in 3Q12 remained at low levels for most developed countries. In an effort to strengthen and stimulate their economies, several central banks implemented additional measures for expansionary monetary policies during the quarter. The US Federal Reserve (Fed) reacted to the slow improvement in the US labor market by extending its pledge to keep short-term interest rates at low levels until mid-2015, noting that monetary policy will remain highly accommodative even after the recovery strengthens. The Fed also announced it will purchase significant amounts of mortgage-backed securities until there is substantial labor market improvement. The Bank of England also voted to extend its asset purchase program and stated it would hold interest rates steady. China cut benchmark interest rates during the quarter after reducing their rates in June for the first time since 2008, and South Korea and Brazil also lowered policy rates. The European Central Bank (ECB) lowered its benchmark interest deposit rates in addition to announcing plans to expand its bond buying program to counter financial market speculation about the weakness of the eurozone framework, stating that it could potentially buy an unlimited amount of eurozone sovereign debt with maturities between one and three years. At the time, this announcement resulted in a marked drop in the bond yields of certain troubled eurozone sovereigns. Important steps towards addressing the eurozone sovereign debt crisis were made during the quarter. The German constitutional court endorsed the creation of the European Stability Mechanism (ESM), provided that Germany s contribution to the framework could only be increased under limited circumstances. Talks between Greece and its European creditors regarding the disbursal of the next tranche of rescue funds continued after Greek elections in the spring resulted in a delay in the government s austerity and reform measures. Yield curves Near term interest rates decreased further in 3Q12. USD EUR CHF % % % Years Years Years p June 30, 2012 p September 30, 2012 Source: Datastream, Credit Suisse

9 Credit Suisse results Operating environment 7 Equity markets Global equity markets showed good performance. Banks outperformed in 3Q12. Volatility remained at low levels. Performance region Index (June 30, 2012 = 100) Performance world banks Index (June 30, 2012 = 100) Volatility % July August September 2012 July August September 2012 July August September p Emerging markets Asia p Europe p Emerging markets Latin America p North America p MSCI World banks p MSCI World p MSCI European banks p VDAX p VIX Source: Bloomberg, MSCI Barra, Credit Suisse Source: Datastream, MSCI Barra, Credit Suisse Source: Datastream, Credit Suisse Global equity prices ended higher in 3Q12 on the back of central bank announcements and increased risk appetite. The broader market made significant gains with the S&P 500 climbing 5.8% in 3Q12 to levels not seen since However, trading volumes on most stock exchanges remained subdued. Equity market volatility, as indicated by the Chicago Board Options Exchange Market Volatility Index (VIX), remained low during the quarter, well below historical averages (refer to the charts Equity markets ). Credit spreads Credit spreads tightened due to the investors search for yield. bp July August September p European CDS (itraxx) p North American CDS (CDX) bp: basis points In fixed income the most significant euro- and US dollardenominated bond indices ended with positive total returns. European high yield bonds and US dollar emerging market bonds posted the strongest returns. European long-dated sovereign and government-related bonds as well as corporates with a strong European peripheral exposure also performed well, supported by a significant decline in Italian and Spanish government bond yields. In the US domestic market, financials posted the best returns among investment grade sectors. US inflation-linked bonds outperformed nominal US treasuries, as the announcement of further quantitative easing by the Fed increased US inflation expectations. The US dollar continued to strengthen against major currencies in the first half of 3Q12 on concerns over eurozone debt and risk aversion. However, the announced measures by the ECB eased the risk premium on the euro, and the actions taken by the Fed weakened the US dollar against most major currencies by the end of the quarter. The minimum exchange rate for the Swiss franc imposed by the Swiss National Bank (SNB) against the euro remained around Following a sharp price decline in 2Q12, commodity markets rebounded during the third quarter. Market-specific events such as renewed geopolitical risks in the Middle East and the severe drought in the US caused some sectors to strengthen. Gold prices increased by more than 10% in response to various central bank announcements of continued monetary easing. Oil prices recovered from their June lows, and Credit Suisse Commodity Benchmark gained almost 12% over the quarter. Source: Bloomberg, Credit Suisse

10 8 Market volumes (growth in %) Global Europe end of 3Q12 QoQ YoY QoQ YoY Equity trading volume 1 (16) (30) (19) (32) Announced mergers and acquisitions 2 (17) (12) (28) (19) Completed mergers and acquisitions 2 (23) (20) (16) (35) Equity underwriting Debt underwriting Syndicated lending investment grade 2, 3 (26) (24) 1 London Stock Exchange, Borsa Italiana, Deutsche Börse, BME and Euronext. Global also includes New York Stock Exchange and NASDAQ. 2 Dealogic 3 9M12 vs 9M11 Sector environment European bank stocks outperformed the broader equity market as measured by the MSCI World Index (refer to the charts Equity markets ). In mid-september the ECB presented its plan to establish a single supervisory mechanism for banks, which was seen as an important step towards a possible European banking union, which, combined with the European Financial Stability Facility and ESM rescue package, led to a stabilization in European bank share prices. Given economic and regulatory uncertainty, many banks sought to maintain solid liquidity buffers, consequently holding significant amounts of cash with central banks. Banks continued to adjust and develop their business models, driven by the need to achieve cost efficiencies and the impacts of regulatory developments. The private banking sector experienced continued low client activity with a significant portion of client assets held in cash. The low interest rate environment continued to negatively impact this sector. Ongoing discussions regarding the Swiss offshore banking model continued to influence the domestic business environment, and concerns about the real estate market overheating in certain areas of Switzerland remained pronounced. In the investment banking sector, global announced and completed mergers and acquisitions (M&A) volumes were lower quarter on quarter and year on year. Global equity underwriting volumes increased from 2Q12, driven primarily by higher follow-on and convertible issuances. Global debt underwriting volumes, including investment grade and high yield issuances, also increased quarter on quarter and year on year. Global equity trading volumes decreased from 2Q12 and 3Q11, amid increased market uncertainty. Fixed income trading volumes were stable quarter on quarter, but declined year on year, particularly in treasuries, federal agency and corporate bonds, while mortgage-backed securities volumes increased from prior year levels. In the asset management sector, the Dow Jones Credit Suisse Hedge Fund Index gained 3.3% as of the end 3Q12, with the largest gains in fixed income arbitrage and long/short equity, which was partly offset by a significant decrease in dedicated short bias. The hedge fund environment was favorable with lower market volatility driven by positive developments in the eurozone debt crisis. In the fixed income sector, recent improvements in some US economic data and the anticipation of bond purchases by the ECB improved the total return forecasts for euro and US dollar short-dated securities portfolios. The third quarter saw inflows into conventional bond and money market funds and exchange-traded funds (ETFs).

11 Credit Suisse results Credit Suisse 9 Credit Suisse In 3Q12, we recorded net income attributable to shareholders of CHF 254 million. Diluted earnings per share were CHF Results in / end of % change in / end of % change 3Q12 2Q12 3Q11 QoQ YoY 9M12 9M11 YoY Statements of operations (CHF million) Net revenues 5,844 6,275 6,689 (7) (13) 18,166 21,737 (16) Provision for credit losses (51) Compensation and benefits 3,094 3,005 3, ,810 10,192 (4) General and administrative expenses 1,862 1,673 2, (16) 5,188 5,493 (6) Commission expenses (3) (12) 1,319 1,512 (13) Total other operating expenses 2,289 2,114 2,694 8 (15) 6,507 7,005 (7) Total operating expenses 5,383 5,119 5,761 5 (7) 16,317 17,197 (5) Income before taxes 420 1, (63) (50) 1,749 4,450 (61) Income tax expense (68) (70) 396 1,068 (63) Net income (61) (38) 1,353 3,382 (60) Net income attributable to noncontrolling interests (171) (66) Net income attributable to shareholders (68) (63) 1,086 2,590 (58) Earnings per share (CHF) Basic earnings per share (67) (70) (63) Diluted earnings per share (65) (70) (64) Return on equity (%, annualized) Return on equity attributable to shareholders Return on tangible equity attributable to shareholders Number of employees (full-time equivalents) Number of employees 48,400 48,200 50,700 0 (5) 48,400 50,700 (5) 1 Based on tangible shareholders equity attributable to shareholders, a non-gaap financial measure, which is calculated by deducting goodwill and other intangible assets from total shareholders equity attributable to shareholders. Management believes that the return on tangible shareholders equity attributable to shareholders is meaningful as it allows consistent measurement of the performance of businesses without regard to whether the businesses were acquired.

12 10 Credit Suisse and Core Results Core Results Noncontrolling interests without SEI Credit Suisse in 3Q12 2Q12 3Q11 3Q12 2Q12 3Q11 3Q12 2Q12 3Q11 Statements of operations (CHF million) Net revenues 5,766 6,241 6, (128) 5,844 6,275 6,689 Provision for credit losses Compensation and benefits 3,082 3,000 3, ,094 3,005 3,067 General and administrative expenses 1,857 1,664 2, ,862 1,673 2,209 Commission expenses Total other operating expenses 2,284 2,105 2, ,289 2,114 2,694 Total operating expenses 5,366 5,105 5, ,383 5,119 5,761 Income before taxes 359 1,111 1, (192) 420 1, Income tax expense Net income (192) Net income attributable to noncontrolling interests (192) (171) Net income attributable to shareholders Statement of operations metrics (%) Cost/income ratio Pre-tax income margin Effective tax rate Net income margin Based on amounts attributable to shareholders. Credit Suisse reporting structure and Core Results Credit Suisse results include revenues and expenses from the consolidation of certain private equity funds and other entities in which we have noncontrolling interests without significant economic interest (SEI) in such revenues and expenses. Core Results include the results of our three segments and the Corporate Center and discontinued operations, but do not include noncontrolling interests without SEI. Credit Suisse Core Results Private Banking Investment Banking Asset Management Corporate Center Noncontrolling interests without significant economic interest Wealth Management Clients Corporate & Institutional Clients

13 Credit Suisse results Core Results 11 Core Results In 3Q12, we recorded net income attributable to shareholders of CHF 254 million. Net revenues were CHF 5,766 million and total operating expenses were CHF 5,366 million. Results in 3Q12 included fair value losses from movements in own credit spreads of CHF 1,048 million before tax, compared to fair value gains of CHF 39 million in 2Q12 and CHF 1,824 million in 3Q11. Our results also reflected gains of CHF 382 million before tax from the sale of real estate and gains of CHF 140 million before tax from the sale of our remaining ownership interest in Aberdeen Asset Management. We recorded net new assets of CHF 5.3 billion, with net new assets of CHF 5.2 billion in Private Banking and net asset outflows of CHF 0.5 billion in Asset Management. We made significant progress in the implementation of the capital measures we announced on July 18, Our Basel II.5 tier 1 ratio was 18.5% as of the end of 3Q12 compared to 16.5% as of the end of 2Q12. Our core tier 1 ratio improved to 14.7% from 12.5% as of the end of 2Q12. We are initiating a further 10% reduction in Investment Banking risk-weighted assets to USD 180 billion and are targeting a balance sheet reduction of CHF 130 billion for the Group to under CHF 900 billion to be achieved by year-end 2013 on a foreign exchange neutral basis. As we expect to exceed our previously announced cost savings, we increased our target by a further CHF 0.5 billion of savings to be achieved during 2014 and a further CHF 0.5 billion during 2015, thereby targeting a total of CHF 4.0 billion of reductions compared to the annualized 6M11 expense run rate. Core Results in / end of % change in / end of % change 3Q12 2Q12 3Q11 QoQ YoY 9M12 9M11 YoY Statements of operations (CHF million) Net interest income 1,707 1,633 1, ,201 4, Commissions and fees 3,231 3,137 3, ,547 10,219 (7) Trading revenues (11) 1,147 1,826 1,316 4,957 (73) Other revenues ,821 1, Net revenues 5,766 6,241 6,817 (8) (15) 17,885 20,956 (15) Provision for credit losses (51) Compensation and benefits 3,082 3,000 3, ,789 10,128 (3) General and administrative expenses 1,857 1,664 2, (16) 5,167 5,479 (6) Commission expenses (3) (12) 1,319 1,512 (13) Total other operating expenses 2,284 2,105 2,687 9 (15) 6,486 6,991 (7) Total operating expenses 5,366 5,105 5,697 5 (6) 16,275 17,119 (5) Income before taxes 359 1,111 1,036 (68) (65) 1,510 3,747 (60) Income tax expense (68) (70) 396 1,068 (63) Net income (68) (63) 1,114 2,679 (58) Net income attributable to noncontrolling interests (67) (81) (69) Net income attributable to shareholders (68) (63) 1,086 2,590 (58) Statement of operations metrics (%) Cost/income ratio Pre-tax income margin Effective tax rate Net income margin Number of employees (full-time equivalents) Number of employees 48,400 48,200 50,700 0 (5) 48,400 50,700 (5) 1 Based on amounts attributable to shareholders.

14 12 Results overview Certain reclassifications have been made to prior periods to conform to the current presentation. u Refer to Format of presentation and changes in reporting in Information and developments for further information. Impact from movements in own credit spreads Our Core Results revenues are impacted by changes in credit spreads on fair-valued Credit Suisse long-term vanilla debt and debit valuation adjustments (DVA) relating to certain structured notes liabilities carried at fair value. For segment reporting purposes through the end of 2011, the cumulative fair value gains of CHF 1.5 billion on Credit Suisse long-term vanilla debt as of the opening 1Q10 balance sheet was charged to the segments on a straight-line amortization basis, and the difference between this amortization and the fair valuation on this Credit Suisse debt from changes in credit spreads was included in the Corporate Center. Beginning in 1Q12, we fully reflect the fair value impact from movements in credit spreads on our long-term vanilla debt and DVA on certain structured notes liabilities in the Corporate Center and discontinued the amortization in the segments of the past fair value gains on long-term vanilla debt. DVA on certain structured notes liabilities was previously recorded in the Investment Banking segment and is now recorded in the Corporate Center in order to aggregate all credit-spread impacts on our funding instruments and to reflect that these impacts are driven by the creditworthiness of the Group rather than our Investment Banking segment or the issuer. Prior periods have been reclassified to conform to the current presentation and such reclassifications had no impact on the Group s net income/(loss) or total shareholders equity. Our Core Results are also impacted by fair valuation gains/(losses) on stand-alone derivatives relating to certain of our funding liabilities. These fair valuation gains/(losses) on the stand-alone derivatives are recorded in the Corporate Center, reflect the volatility of cross-currency swaps and yield curve volatility and, over the life of the derivatives, will result in no net gains/(losses). In Private Banking, net revenues of CHF 2,591 million were stable compared to 3Q11, with lower transaction-based revenues, higher net interest income and stable recurring commissions and fees. The results reflected margin pressure in an adverse operating environment, partially mitigated by the continuing implementation of our strategic initiatives. Transactionbased revenues were 11% lower, driven by lower revenues across all major revenue categories, reflecting significantly lower client activity and lower transaction volumes. Net interest income increased 6%, reflecting higher average deposit and loan volumes. Recurring commissions and fees were stable as higher investment account and services fees were offset by lower investment product management fees and lower discretionary mandate management fees. In Investment Banking, net revenues of CHF 3,296 million were up 66% compared to 3Q11. Results demonstrated strong franchise momentum and the continued execution of our refined strategy to increase operating and capital efficiencies. Fixed income sales and trading revenues were strong, reflecting solid client flow and favorable trading conditions. Relative to 3Q11, results were significantly higher, driven by a substantial increase in securitized products and global credit products revenues due to a more favorable market environment with greater client demand for higher yielding instruments, and improved results for emerging markets. We are benefitting from a more balanced business portfolio with reduced revenue volatility, reflecting the significant decline in inventory levels. Equity sales and trading revenues were resilient and increased relative to 3Q11, reflecting more favorable market conditions, with stronger revenues across equities arbitrage trading, convertibles and fund-linked products. Underwriting and advisory results were higher in the quarter relain 3Q12 2Q12 3Q11 9M12 9M11 Net income/(loss) attributable to shareholders, excluding impact from movements in own credit spreads (CHF million) 1, (598) 3,043 1,771 Fair value gains/(losses) from movements in own credit spreads (1,048) 39 1,824 (2,563) 1,225 Of which fair value gains/(losses) on own long-term vanilla debt (681) 109 1,277 (1,466) 1,022 Of which fair value gains/(losses) on debit valuation adjustments on structured notes (338) (18) 538 (838) 515 Of which fair value gains/(losses) on stand-alone derivatives (29) (52) 9 (259) (312) Tax expense/(benefit) (183) (606) 406 Net income attributable to shareholders ,086 2,590 Regulatory capital excludes cumulative fair value gains/(losses) related to own long-term vanilla debt and structured notes, net of tax. Refer to Treasury management in II Treasury, risk, balance sheet and off-balance sheet for further information.

15 Credit Suisse results Core Results 13 Core Results reporting by division in % change in % change 3Q12 2Q12 3Q11 QoQ YoY 9M12 9M11 YoY Net revenues (CHF million) Wealth Management Clients 2,117 2,217 2,126 (5) 0 6,461 6,681 (3) Corporate & Institutional Clients (3) 0 1,438 1,439 0 Private Banking 2,591 2,704 2,600 (4) 0 7,899 8,120 (3) Investment Banking 3,296 2,909 1, ,364 9,885 5 Asset Management ,838 1,767 4 Corporate Center (728) 78 1,743 (2,216) 1,184 Net revenues 5,766 6,241 6,817 (8) (15) 17,885 20,956 (15) Provision for credit losses (CHF million) Wealth Management Clients (7) Corporate & Institutional Clients (9) (5) Private Banking (8) Investment Banking 5 (14) 59 (92) (15) 55 Provision for credit losses (51) Total operating expenses (CHF million) Wealth Management Clients 1,608 1,638 2,115 (2) (24) 4,966 5,548 (10) Corporate & Institutional Clients Private Banking 1,866 1,890 2,368 (1) (21) 5,714 6,282 (9) Investment Banking 2,783 2,540 2, ,490 8,859 (4) Asset Management (8) (3) 1,229 1,277 (4) Corporate Center Total operating expenses 5,366 5,105 5,697 5 (6) 16,275 17,119 (5) Income/(loss) before taxes (CHF million) Wealth Management Clients (9) (12) 1,420 1, Corporate & Institutional Clients (8) (5) (8) Private Banking (11) 233 2,070 1, Investment Banking (720) 33 1, Asset Management Corporate Center (1,060) (180) 1, (3,058) 483 Income before taxes 359 1,111 1,036 (68) (65) 1,510 3,747 (60) tive to 2Q12 and 3Q11, driven by strong underwriting revenues due to robust issuance volumes and higher M&A, advisory and private placement fees. In Asset Management, net revenues of CHF 607 million were up 23% compared to 3Q11. In July 2012, we sold our remaining ownership interest in Aberdeen Asset Management, resulting in a gain of CHF 140 million in 3Q12 and total gains of CHF 384 million in 2012, improving our capital position. Equity participations and other gains and losses also included an impairment of CHF 38 million related to Asset Management Finance LLC (AMF). Investment-related gains of CHF 101 million were significantly higher than the CHF 27 million gain in 2Q12 and the CHF 17 million loss in 3Q11, with gains in the energy and transport sectors and in hedge fund investments. Compared to 3Q11, fee-based revenues of CHF 438 million were down 14%, with lower carried interest on realized private equity gains and lower equity participations income. Our feebased margin was 48 basis points compared to 56 basis points in 3Q11. u Refer to Private Banking, Investment Banking and Asset Management for further information. Corporate Center includes parent company operations such as Group financing, expenses for projects sponsored by the Group and certain expenses and revenues that have not been allocated to the segments. In addition, the Corporate Center includes consolidation and elimination adjustments required to eliminate intercompany revenues and expenses. In 3Q12, losses before

16 14 Overview of results Private Banking Investment Banking Asset Management in / end of period 3Q12 2Q12 3Q11 3Q12 2Q12 3Q11 3Q12 2Q12 3Q11 Statements of operations (CHF million) Net revenues 2,591 2,704 2,600 3,296 2,909 1, Provision for credit losses (14) Compensation and benefits 1,049 1,107 1,092 1,520 1,457 1, General and administrative expenses ,129 1, Commission expenses Total other operating expenses ,276 1,263 1,083 1, Total operating expenses 1,866 1,890 2,368 2,783 2,540 2, Income/(loss) before taxes (720) Income tax expense Net income Net income attributable to noncontrolling interests Net income attributable to shareholders Statement of operations metrics (%) Cost/income ratio Pre-tax income margin (36.3) Effective tax rate Net income margin Utilized economic capital and return Average utilized economic capital (CHF million) 7,667 7,360 7,057 18,833 19,327 19,017 2,846 3,080 3,155 Pre-tax return on average utilized economic capital (%) (14.6) Balance sheet statistics (CHF million) Total assets 376, , , , , ,416 24,074 23,647 22,739 Net loans 205, , ,177 37,178 36,623 34,256 Goodwill ,358 6,393 6,191 1,478 1,491 1,437 Number of employees (full-time equivalents) Number of employees 24,100 23,800 24,700 20,600 20,600 22,100 2,800 2,900 3,000 1 Core Results include the results of our integrated banking business, excluding revenues and expenses in respect of noncontrolling interests without SEI. 2 Includes diversification benefit. 3 Calculated using a return excluding interest costs for allocated goodwill. 4 Under the central treasury model, Group financing results in intra-group balances between the segments. The elimination of these assets and liabilities occurs in the Corporate Center. taxes were CHF 1,060 million, including fair value losses on our long-term vanilla debt of CHF 681 million, fair value losses on stand-alone derivatives of CHF 29 million and DVA losses on certain structured notes liabilities of CHF 338 million, resulting in overall losses on such items of CHF 1,048 million in the quarter. The fair value losses on own vanilla debt reflected the narrowing of credit spreads on senior and subordinated debt across most currencies. 3Q12 results also included gains of CHF 382 million from the sale of real estate, CHF 104 million of costs recorded as Investment Banking revenues relating to the capital measures announced in July 2012 and business realignment costs of CHF 144 million, consisting primarily of severance and other compensation expenses relating to the Groupwide cost efficiency initiatives. u Refer to Impact from movements in own credit spreads for further information. Provision for credit losses were net provisions of CHF 41 million in 3Q12, with net provisions of CHF 36 million in Private Banking and CHF 5 million in Investment Banking. Total operating expenses of CHF 5,366 million were down 6% compared to 3Q11, primarily reflecting 16% lower general and administrative expenses. The decrease in general and administrative expenses reflected litigation provisions of

17 Credit Suisse results Core Results 15 Corporate Center Core Results 1 Noncontrolling Interests without SEI Credit Suisse 3Q12 2Q12 3Q11 3Q12 2Q12 3Q11 3Q12 2Q12 3Q11 3Q12 2Q12 3Q11 (728) 78 1,743 5,766 6,241 6, (128) 5,844 6,275 6, ,082 3,000 3, ,094 3,005 3, ,857 1,664 2, ,862 1,673 2, ,284 2,105 2, ,289 2,114 2, ,366 5,105 5, ,383 5,119 5,761 (1,060) (180) 1, ,111 1, (192) 420 1, (192) (192) (171) , , , ,161 31,666 30,338 31,161 31,666 30, (154,695) 4 (148,006) 4 (139,627) 4 1,018,848 1,038,863 1,055,272 4,444 4,592 6,249 1,023,292 1,043,455 1,061, , , , , , ,447 8,603 8,665 8,361 8,603 8,665 8, ,400 48,200 50,700 48,400 48,200 50,700 CHF 478 million in Private Banking in 3Q11. The lower operating expenses also reflected our expense reduction initiative. Compensation and benefits were CHF 3,082 million, up 2% compared to 3Q11. An income tax expense of CHF 101 million in 3Q12 mainly reflected the impact of the geographical mix of results, the re-assessment of deferred tax assets and related valuation allowances that led to increases of net deferred tax assets in the US, partially offset by an increase in the valuation allowances against deferred tax assets in the UK. In addition, the income tax expense was negatively influenced by the reduction of deferred tax asset caused by the impact of the change in UK corporation tax from 25% to 23% enacted in 3Q12. Deferred tax assets on net operating losses decreased CHF 1,396 million to CHF 2,145 million during 3Q12. The decrease in deferred tax assets on net operating losses primarily related to taxable gains on transfers of assets within the consolidated Group for which associated tax charges have been deferred as other assets in accordance with Accounting Standards Codification (ASC) (Consolidation other presentation matters, formerly Accounting Research Bulletin (ARB) 51). The deferral will be amortized over a period of up to 15 years in line with ASC principles and

18 16 Core Results reporting by region in % change in % change 3Q12 2Q12 3Q11 QoQ YoY 9M12 9M11 YoY Net revenues (CHF million) Switzerland 1,794 1,933 1,874 (7) (4) 5,655 5,832 (3) EMEA 1,670 1,705 1,534 (2) 9 5,406 5,307 2 Americas 2,540 2,000 1, ,158 6, Asia Pacific (7) (10) 1,882 2,116 (11) Corporate Center (728) 78 1,743 (2,216) 1,184 Net revenues 5,766 6,241 6,817 (8) (15) 17,885 20,956 (15) Income/(loss) before taxes (CHF million) Switzerland (24) (7) 1,967 1,971 0 EMEA (159) Americas (774) 78 1, Asia Pacific (160) (93) (87) (72) 141 Corporate Center (1,060) (180) 1, (3,058) 483 Income before taxes 359 1,111 1,036 (68) (65) 1,510 3,747 (60) A significant portion of our business requires inter-regional coordination in order to facilitate the needs of our clients. The methodology for allocating our results by region is dependent on management judgment. For Private Banking, results are allocated based on the management reporting structure of our relationship managers and the region where the transaction is recorded. For Investment Banking, trading results are allocated based on where the risk is primarily managed and fee-based results are allocated where the client is domiciled. For Asset Management, results are allocated based on the location of the investment advisors and sales teams. will be matched by future tax deductions. In addition, the impact of the UK corporation tax reduction and foreign exchange translation losses further reduced the net deferred tax assets. The decrease was partially offset by increases in net deferred tax assets as a result of the re-assessment of deferred tax assets and related valuation allowances in the UK and US. Overall, net deferred tax assets decreased by CHF 1,591 million to CHF 7,034 million during 3Q12. The Core Results effective tax rate was 28.1% in 3Q12, compared to 28.0% in 2Q12. u Refer to Note 20 Tax in III Condensed consolidated financial statements unaudited for further information. Assets under management were CHF 1,250.7 billion, up CHF 37.6 billion, or 3.1% compared to the end of 2Q12, mainly reflecting positive market performance and net new assets. Private Banking recorded net new assets of CHF 5.2 billion in 3Q12, including CHF 5.1 billion from Wealth Management Clients, with inflows across all regions, particularly from emerging markets and from its ultra-high-net-worth individual (UHNWI) client segment. Asset management recorded net asset outflows of CHF 0.5 billion in 3Q12, with inflows in alternative investments, more than offset by outflows in traditional investments and diversified strategies. Information and developments Format of presentation and changes in reporting In managing the business, revenues are evaluated in the aggregate, including an assessment of trading gains and losses and the related interest income and expense from financing and hedging positions. For this reason, individual revenue categories may not be indicative of performance. In 3Q12, we began recording gains on the sale of real estate in connection with our July 2012 capital measures in the Corporate Center. Prior periods have been restated to conform to current presentation. In 2Q12, we made a number of changes to the presentation of our results, mainly related to the legal merger of Clariden Leu into the Bank, the integration of our Private Banking and Investment Banking operations into a single function and other changes relating to the management and measurement of our assets under management and net new assets. As a result of these matters, prior period results of the Bank and its divisions and assets under management for the Group were restated. u Refer to Changes in reporting in Information and developments in the Credit Suisse Financial Report 2Q12 for further information.

19 Credit Suisse results Core Results 17 The definitions of regulatory capital and capital ratios mentioned below and in II Treasury refer to the Swiss Too Big to Fail legislation adopted in September 2011 as determined by the Swiss Financial Market Supervisory Authority (FINMA). Ratio calculations based on these capital definitions use projected Basel III year-end 2012 risk-weighted assets. The expected year-end 2012 ratios are based on a pro-forma calculation assuming successful completion of the July 2012 capital measures, and using Bloomberg consensus net income estimates and our Basel III risk-weighted assets estimates. As the Basel Committee on Banking Supervision (BCBS) Basel III framework (Basel III) will not be implemented before January 1, 2013, we have calculated our Basel III risk-weighted assets and capital for purposes of this report in accordance with the currently proposed requirements and our current interpretation of such requirements, including relevant assumptions. Changes in the actual implementation of Basel III would result in different numbers from those shown in this report. Capital measures and target On July 18, 2012, we announced a number of measures (the July 2012 capital measures) to accelerate the strengthening of our capital position in light of the current regulatory and market environment. We also announced a capital ratio target of 10% based on our estimate of the Look-through Swiss Core Capital ratio, which we expect to achieve by the middle of During 3Q12, we made significant progress in implementing the July 2012 capital measures, achieving CHF 12.8 billion of the CHF 15.3 billion target. The measures are expected to result in a year-end 2012 Look-through Swiss Core Capital ratio of approximately 9.3%. We announced a CHF 130 billion balance sheet reduction for the Group to under CHF 900 billion to be achieved by yearend 2013 on a foreign exchange neutral basis. Together with the July 2012 capital measures, this will improve our leverage ratio. u Refer to Progress made on capital measures in 3Q12 and Capital ratio simulations in II Treasury, risk, balance sheet and off-balance sheet Treasury management for further information. Cost savings and strategy implementation We continued to adapt our client-focused, capital-efficient strategy to optimize our use of capital and improve the cost structure. In 2011, we began implementing a number of cost efficiency initiatives with the goal of achieving CHF 2.0 billion in total cost savings compared to the annualized 6M11 expense run rate by the end of In July 2012, we announced an increased year-end 2013 cost savings target of a total of CHF 3.0 billion. As we expect to exceed our previously announced cost savings, we increased our target by an additional CHF 0.5 billion of savings to be achieved during 2014 and a further CHF 0.5 billion during 2015, thereby targeting a total of CHF 4.0 billion Key performance indicators Our key performance indicators (KPIs) are targets to be achieved over a three to five year period across market cycles. As such, year to date results may be more meaningful than individual quarterly results. Our KPIs are assessed annually as part of our normal planning process. in / end of Target 3Q12 9M Growth (%) Collaboration revenues % of net revenues Net new asset growth (annualized) Above 6% Efficiency and performance (%) Total shareholder return (Credit Suisse) 2 Superior return vs. peer group 15.5 (6.2) (39.4) (23.3) 80.1 Total shareholder return of peer group 2, (35.0) (1.7) 36.6 Return on equity attributable to shareholders (annualized) Above 15% Core Results pre-tax income margin Above 28% Capital (%) Tier 1 ratio (Basel II.5) Compliance with Swiss Too Big to Fail and Basel III Includes revenues recognized when more than one of the Group s three divisions participates in a particular transaction. Collaboration revenues are measured by a dedicated governance structure and implemented through revenue sharing agreements or internal revenue sharing awards. Only the net revenues generated by the transaction are considered. 2 Source: Bloomberg. Total shareholder return is calculated as equal to the appreciation or depreciation of a particular share, plus any dividends, over a given period, expressed as a percentage of the share s value at the beginning of the period. 3 The peer group for this comparison comprises Bank of America, Barclays, BNP Paribas, Citigroup, Deutsche Bank, HSBC, JPMorgan Chase, Société Générale and UBS. The total shareholder return of this peer group is calculated as a simple, unweighted average of the return reported by Bloomberg for each of the members of the peer group.

20 18 of expense reductions compared to the annualized 6M11 expense run rate. The majority of these savings will be realized from shared infrastructure and support services across the Group, mainly through the consolidation of fragmented and duplicate functions globally and the continued consolidation of IT applications and functions. We have also targeted further savings within our three operating divisions, principally within Investment Banking by driving synergies in our equities businesses and continuing to rationalize businesses in Fixed Income, underwriting and advisory. We expect to incur approximately CHF 240 million of business realignment costs associated with these measures in 4Q12, and an additional CHF 1 billion of such costs over the course of 2013 to u Refer to Strategy in I Information on the company in the Credit Suisse Annual Report 2011 and Private Banking, Investment Banking and Asset Management for further information. Share Issuances In 3Q12, we issued 33.5 million new Group shares to cover the 2Q12 purchase of the residual minority stake in Hedging- Griffo Investimentos S.A. (Hedging-Griffo), representing approximately 2.5% of our share capital upon issuance. Compensation and benefits Compensation and benefits for a given year reflect the strength and breadth of the business results and staffing levels and include fixed components, such as salaries, benefits and the amortization of share-based and other deferred compensation from prior-year awards, and a discretionary variable component. The variable component reflects the performancebased variable compensation for the current year. The portion of the performance-based compensation for the current year deferred through share-based and other awards is expensed in future periods and is subject to vesting and other conditions. u Refer to Compensation and benefits in II Operating and financial review Core Results in the Credit Suisse Annual Report 2011 for further information. Regulatory developments and proposals Government leaders and regulators continued to focus on reform of the financial services industry, including capital, leverage and liquidity requirements, changes in compensation practices and systemic risk. On September 12, 2012, the European Commission published a proposal for a regulation that would empower the ECB as a single supervisor for banks in the 17 eurozone EU Member States, a communication explaining their plans to create a European banking union, and a proposal for a regulation that would define the role of the European Banking Authority under the new supervisory arrangements. These proposals contemplate an ongoing role for the existing national eurozone regulators. On September 18, 2012 the Swiss Parliament adopted implementing ordinances related to the Too Big to Fail legislation including with regard to the implementation of Basel III into Swiss law. The ordinances will be effective January 1, 2013 and include requirements particular to systemically relevant banks, including specific capital, leverage, large exposure and Recovery and Resolution Plan requirements. A liquidityrelated implementing ordinance under the legislation remains pending, part of which is expected to be completed by yearend 2012 and enter into force January 1, 2013, with further quantitative requirements specific to systemically relevant banks expected to be approved by Parliament and become effective in the first half of The further quantitative requirements are expected to be based on an existing agreement reached with FINMA. On September 19, 2012, the staff of the US Commodity Futures Trading Commission (CFTC) issued guidance clarifying that swap dealer registration under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) will not be required until December 31, 2012, at the earliest, although swap dealers may register voluntarily before then. This guidance will have the effect of delaying the application of most CFTC rules under the Dodd-Frank Act to Credit Suisse until the earlier of December 31, 2012 or when Credit Suisse decides to register a subsidiary as a swap dealer. Bilateral tax agreements between Switzerland and each of the UK and Austria have now been approved by the contracting countries and will enter into force on January 1, The agreement between Switzerland and Germany has been approved by Switzerland and is expected to be considered by German legislators before year-end u Refer to Regulation and supervision in I Information on the company in the Credit Suisse Annual Report 2011 for further information. Allocations and funding Responsibility for each product is allocated to a segment, which records all related revenues and expenses. Revenuesharing and service level agreements, which aim to reflect the pricing structure of unrelated third-party transactions, govern the compensation received by one segment for generating revenue or providing services on behalf of another. Corporate services and business support are provided by the Shared Services area and these costs are allocated to the segments and Corporate Center based on their requirements and other relevant measures.